NEW DELHI: Delhi-based MDLR Airlines could be in trouble. British Aerospace Systems (BAE), the lessor for MDLR���s entire three-aircraft fleet, has sent the Directorate General of Civil Aviation (DGCA) a notice for de-registration of these machines over non-payment of the lease amount.

BEA Systems India spokesperson Guy Douglas told ET: ���We have served a default notice on MDLR Airlines due to non-payment of aircraft lease amount for many months. We are forced to take such a drastic step as the airline has not made any payment on the three aircraft leased by us.���

MDLR COO Koustav M Dhar admitted that they had defaulted on the monthly lease payments to the British company. ���Like any other airline we are also facing cash crunch and there have been delays over lease payments. There is severe economic downturn in the industry and the airline is facing some operational problems, with few of our aircraft down on technical reasons. We are negotiating with BAE on various issues to keep the airline afloat.���

MDLR has been facing problem over the non-functioning of its fleet and is currently not operating its entire three-aircraft fleet. Following irregular operations and frequent flight cancellations, many employees, including COO UK Bose, has quit the company.

DGCA has been briefed over the matter and is awaiting a formal notice on the issue. DGCA director-general Kanu Gohian said: ���There can be issues between the lessor and the lessee over non-payments. It (notice) could be in the process, but we are yet to receive any official intimation or notice.���

According to the aviation industry source, the airline has been facing severe cash crunch and has failed to meet its financial commitments with the lessor and the Airports Authority of India and jet-fuel suppliers.

Its total commitments could not be verified, but the aircraft hired by it, RJ 70, comes at a market price of about Rs 84 lakh per month. The company has not paid the dues for the past few months, forcing BAE to regain the possession of these aircraft, with cumulative liabilities running into several crores of rupees.

According to aviation experts, if BAE, the real owner of the aircraft goes ahead with the de-registration process, MDLR will no longer be allowed to use these machines. The original owner has the power to take back the aircraft with the permission of the regulator, DGCA. MDLR will find it difficult to keep the airline running as it does not have any alternative arrangements to keep the airline running.

MDLR, which is promoted by the real estate company MDLR Group, had started its operations in April last year as a regional carrier with operations in Chandigarh, Ranchi, Kolkata and Delhi. It currently operates with three 70-seater, RJ 70 aircraft fleet, leased from BAE which is also the manufacturer of these aircraft.